MPs blast Spelthorne’s £1bn property purchases

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In a report published today (13th July) the House of Commons Public Account Committee (PAC) has roundly condemned Spelthorne as the worst example of a small number of councils who have borrowed excessively to invest in the property market.

Spelthorne is singled out for particular criticism, with the PAC echoing the serious concerns raised by Spelthorne Liberal Democrats, including a lack of transparency in decision making and public accountability.

The report draws attention to Spelthorne Council borrowing 100 times its income.

The PAC had no doubt that this was unwise and not in line with the guidance issued by the Department for Housing Communities and Local Government (DHCLG). In this context, the DHCLG said that it is most concerned about "the Spelthornes of this world".

Spelthorne Liberal Democrat councillor Lawrence Nichols has been pressing hard for changes in the way Spelthorne Council makes investment decisions and assesses the financial risks of investments. The PAC report upholds these concerns and has highlighted a number of poor council practices which has been apparent in Spelthorne, including:

• Decisions being made by a very small group of Conservative councillors based on limited information
• Keeping papers secret on the grounds of commercial confidentiality long after the transactions have completed
• Poorly formulated objectives which cannot be measured
• Lack of member scrutiny of property-related decisions
• Over-reliance on consultants who may have conflicts of interest

Easy access to cheap money has resulted in Spelthorne borrowing excessively without due regard to the risks involved. The level of risk has been cruelly exposed by the current Covid-19 crisis, with significant shortfalls in rent being received from both commercial and retail tenants. Conservative-controlled Spelthorne has not behaved like a prudent financial institution when spending £1bn of public money.

The full report is available here

The Liberal Democrat submission to the PAC is available here

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